Martin Wolf Lecture - The Crisis of the Liberal World Order

Good afternoon everyone. It's my great pleasure to welcome all of you today.

Special thanks also to the American Academy in Berlin helped set up this event and is with us today. Welcome

today. Welcome For decades, Martin has shaped the global conversation on economics, finance, and the future of open societies.

As chief economics commentator at the Financial Times, his analysis has guided policy makers, academics, market

participants, and since citizens alike.

His voice is international recognized not just for its expertise, but for its integrity.

Martin has consistently helped us understand the deeper forces shaping the world economy from globalization and financial crisis with the tensions now

testing the foundations of democracy.

This work is marked by the ability to connect economics with politics society and politics in a way that illuminates the stakes for all of us.

Today's lecture the crisis of the world order could not be more timely.

As his intervention is going to illustrate, we are living through a period of profound transformation. We

have erosion of longstanding certainties, the return of great power rivalry, the shift in global economic gravity and the growing pressures on democratic institutions.

Understanding these dynamics is essential for shaping the policies and choices that lie ahead of us.

Martin, we are really honored to have you with us and grateful for the clarity and correction with which you continue to analyze the challenges of our age.

Thank you for joining us today.

>> So first of all, thank you very much for that extraordinary kind, almost embarrassingly introduction.

[clears throat] It honestly never occurred to me in my life that I would be delivering a lecture in uh any central bank, but

certainly in a central bank of this importance and significance.

I remember that I wrote a great deal long ago about the creation of the euro which I thought was a very risky project. Uh and I've been

project. Uh and I've been the European Central Bank many times since its foundation. I often met

Vidyenber here and Thomas who was a very close friend of mine and being here and able to give a lecture

when Christine Lagard also somebody I regard as a good and close friend is present it's a tremendous honor before I start

this is a very broad lecture it's not going to discuss monetary polic at all because believe it or not in this

context I think it's secondary uh it's about how I see the evolution of the world system and particularly what

forces are shaping it as it were among states and within states and how those interact so it is indeed about politics

and economics and if there is one I feel I've learned most clearly in my life as a professor professional economist at

the World Bank and subsequently as analyst of world trade then is that it is impossible to separate economics from politics

and I think it's probably the most important thing economists can uh know that their domain and that's particularly true if you're talking

about macroeconomics of course you are here can never be separated from politics as the two things go together. So with that very

quick introduction let me talk give you this lecture which I think will take about 40 minutes maybe 42. It's got a

lot in it. I know it's quite compressed.

Uh but you here of course and those listening will certainly be able to pick it all up because you'll be with a lot of the material I'm using.

So, uh, I'm gonna start with a couple of quotations.

And the first quotation is from somebody you will certainly never have heard of.

There may be someone here who has, but there's no reason why you should, but it's a quotation I particularly enjoyed a great great deal of influence on me. Yan Tom was a Czech refugee, a

on me. Yan Tom was a Czech refugee, a refugee from communism, uh, who became the chief economist of the GAD during the 1980s. And that was

the the glory days of the GAD. It was

when the Uruguay round, the last important multilateral trade negotiation of the postwar era was prepared and not

finished. uh it was finished after he

finished. uh it was finished after he left in the early 90s and Yan was a true liberal much more uh radically so than

me but I remember very well discussions we had at that time about the nature of learning from history as societies and what happened with the lessons and he

gave made this remark to me a couple of times and I think it's incredibly important it has informed my thinking for instance

about financial crisis. So I think a financial crisis is becoming quite likely now because far too many people who work in trading rooms don't remember

the last one. The anyway the quote is it's not true that we don't learn from history. We do and then we forget and

history. We do and then we forget and part of the way we forget is we die and our grandchildren ultimately inherit the position.

And I think that's very important. And

the second quote I want to do is offer is a pretty extraordinary quotation given the history of the country concerned the constitutional apparatus

of this country and its central role in what I will part of what I will talk about the establishment of a liberal and increasingly democratic world order after the second world war made the

president of the United States Donald Trump who said last summer I have the right to do anything I want to do. I'm

the president of the United States. And

there is really no doubt whatsoever he believes that. And that's quite a

believes that. And that's quite a remarkable and significant statement to come from this man. So how did we get

here? So my lecture is divided into five

here? So my lecture is divided into five parts. It's quite journalistic. I am a

parts. It's quite journalistic. I am a journalist after all. The first part is where I how I think about where we are.

in a historical context and the history I'm going to talk about is the late 19th and early 20th centuries predominantly in Europe

and that first part is I call history rhymes and just to make clear what I why I'm using that sentence two word sentence for those of you who don't know

I think most of you do know very famously the American writer Mark Twain I think the greatest American writer

to that said history does not repeat itself but it rides.

The second thing I want to talk about is where we are now. What the world looks like today.

Then I'm going to talk about how we got to where we are now. And then I'll talk briefly about what is at stake, what I think the issues are, the big issues are

now. And then very the very last what is

now. And then very the very last what is to be done and I will focus on the EU and of course it goes without saying I am very well aware that my country is

not a member of the EU uh it was over my dead body except that I didn't die but

we we left alas okay um so what uh what is this rhyme I mean I the argument I'm making is that if you live through a period

So we're talking about after the industrial revolution. So the last 200

industrial revolution. So the last 200 years or so which has been a period of revolutionary transformation in the history of the world hasn't been

anything like the last 200 years in human history so far as we know and it's very well hidden if it has existed. Uh

this generated periods of wild transformation and particularly two great periods of globalization,

market liberalization and rapid technological change. The late 19th to

technological change. The late 19th to the middle 20th century and again the last 30 or 40 years.

In such periods you see huge changes in relative economic power.

You also see partly because of those changes in relative economic power emerging clashes in liberal and

interventionist paradigms of how economic policy should be conducted.

And you also see huge prof profound social and cultural changes. And I'm

going to argue I understand the complexity of this, but this happened between 1870 and 1914 and ended up with

a period of colossal turmoil in Europe which spread to the whole world also in the United States to the whole

world which ended the whole 19th early 20th century globalization and liberalization and again it's been happening since 1980

and I argue it's accelerating.

Um so we're again as we were in the the world was Europe was in the late 19th 20 centuries in an era of declining trust

in liberalism and democracy and rising nationalism and populism. If you a literary expression written after the

beginning of the disaster of what was happening in the earlier period. Thomas

man's magic mountain is the perfect literary expression of exactly what I'm talking about. So if you understand the

talking about. So if you understand the social cultural context, particularly the intellectual context for such revolutions, that's a pretty good place

to start. Personally, I think it's the

to start. Personally, I think it's the most important novel of the 20th.

Sorry, just make sure. Okay. So, I'm

going to start um with a history rhymes thing. So, this is a chart which shows

thing. So, this is a chart which shows the ratio of world trade to world GDP since the early 19th century. a chart

which you probably seen in different forms over this uh period and the uh basically you can see though they're

very different in shape two periods of globalization by which I mean periods and I don't have other time I can't go through all the other measures of globalization financial and so forth

it's not possible in this lecture I'll just focus on trade which is a very powerful indicator so this is trading goods so What this shows is that from

the middle of the 19th century to the second world war, the ratio of trade to GDP first reached an unparalleled level

and uh reached a peak uh just at uh the time of the first world war. Thereafter

came a collapse, a very prolonged collapse uh started in the 20s and of course collapsed completely in the 30s and into the second world war and at the

end of the ratio from world trade to GDP had fallen to where it was almost 100 years earlier and the this was the result of the disintegration of the

world system that began with the first world war obviously don't go through this history but we know that happened and the idea then we had a partial recovery in the western world which you

can see going on to about the 1970s to 80s a partial recovery of the world system huge recovery in the western world under the Marshall Plan, the creation of the EU, the first gas round

and so forth and then the true explosion that began in the 1980s with the opening up of China and economies to reach a

level of openness of trade to GDP and capital flows by the way look similar to this so in different ways with migration to reach a level about twice what it had

ever been before. So that's the history very briefly as measured in this uh of the ups and downs of the liberal world

economy as measured by trade but the other measures would look pretty similar.

Um and the key point here of course is that uh at the end we're now stable since the financial crisis the ratio is

stabilized. It hasn't collapsed yet.

stabilized. It hasn't collapsed yet.

But globalization process the increased integration has stopped on every measure since about 2009.

We are globalizing more. Now the second chart shows the relationship uh between globalization and again I discuss this with great length in my

book the crisis of democratic capitalism. The uh I don't really need

capitalism. The uh I don't really need to stand here. walk around. So, um

that's much better for me. I can

actually see my text. Uh the uh and I hate standing behind a a pulpit. Anyway,

so the uh the second shows a very interesting relationship which I argue and I don't have time to go through these arguments in great detail here is uh is not an accident correlation

between democratization of politics and the opening of the world economy.

Basically what they share is a belief in freedom, individual choice and confidence in the future. There's a both these things are needed for these sorts

of processes to be conceded and to function. And what it basically shows

function. And what it basically shows the brown line is taken from the polity 4 database which I used in my book and it shows the proportion of the world's

regimes obviously far fewer in the 19th century than more recently because of decolonization the end of empire. But

you can see that in the course of the 19th century we there was an enormous move and it continued just out of the first world war towards democracy. It's

worth noting under the policy for database and any similar base the number of even marginally democratic regimes in

the world uh uh in 1800 was essentially zero.

This was this has been one of the great transformations of the last 225 years.

The democracy has become normal and and you can see by 1870 was 10% then it moved to 40%. Then there was a

progressive collapse and by 19 between 1940 and 1945 because of fascism uh and because of communism the number of regimes had gone

back pretty well to where they were 80 years. actually was 80 years earlier.

years. actually was 80 years earlier.

I'm just showing the pre sorry uh uh 70 years and then there was a recovery immediately after the war because Europe

was liberated. Then we had um a long

was liberated. Then we had um a long uh static period and then from 1980 to just with with the globalization and

this is shown in the other two lines which show another ratio of trade over GDP. We see this explosion and

GDP. We see this explosion and production of world regimes that were democratic which continued again till it stabilized about 908

or n there's some disagreement but that's basically when it stabilized and as I will show has fallen uh back so the

two things seem to to a remarkable degree to have coincided areas of globalization where eras of democratization Of course, if you look

at a number of countries that were democratic, the number of countries that have been democratic recently has far succeeded ever before in history. So, it

was an era of democratization as well as an era of liberalization economically.

Now uh then I want to introduce uh the most obvious similarity between the period the the precursors of the end of

the first globalization as it was called um the first globalization this great period the 19th and early 20th of

expansion trade expansion commerce um uh one of the things that happened and it is remarkably similar to what's now is a total transformation of

relative economic power very very quick and in my view facilitated significantly by imitating and absorbing technology and ideas from

Britain and then developing far beyond them. And the most remarkable cases and

them. And the most remarkable cases and the most significant of cases of this was the rise of America and the rise of Germany within Europe which completely

changed the balance of power in the world and in Europe. Obviously the

transformation of Germany which moved from being having half the size of the economy of Britain in 1870 to the same size as Britain very with a much stronger industry by 1914 is shown with

the blue line relative to the purple line. And behind it, you have the the

line. And behind it, you have the the great rise of the world's superpower.

And the United States had become the world's superstar definitively by 1900.

And nobody in Europe had worked that out. Remarkably few had worked that out.

out. Remarkably few had worked that out.

Um uh and ultimately of course after a long period of history which we all know and US emerged as the dominant hedgemen

and it sorted out essentially the instability generated in Europe by its inability to resolve the tensions among

the European parts. Now the the second chart shows what's happened more recently. This is I'm using PPP. I think

recently. This is I'm using PPP. I think

this is the best measure. Obviously, if

you use other measures, the relative sizes would look different. But I think it brings out the relative point. Back

in 1980, the western world was the world economically.

It was the world. I won't give you the relative figures but on any measure the world economy was overwhelming to one nature by the western powers. Europe and

America were roughly similar but America was a concentrated continental superpower and you can see this here I've used the G7 here rather than

putting in the EU as such but I've also put in China and India and you can see the rise of China and this is shares of world GDP for various

reasons I've used that as my indicator and the the basic point is that 20 years ago China was irrelevant

25 years ago and now it's a colossus and this is a stupendous change in world uh economic power and it has gone along with though I don't present paps uh data

on that the transformation of the weight in manufacturing in the world where China is unquestionably now the superpower

it manufacturing sector is basically big as the the G7 together so this is a transformation of the world as profound

as the rise of the US in my view not quite but very similar and it creates for the first time two rival continental

scale superpowers and it's this is the um the uh uh biggest thing that has happened to the world I think the last

three four three decades and I think it's the most important shaping event single shaping event although it's

only now this chart shows US trade policy over much the same period as the information I given you about globalization this is US average

effective tariff rates in 1790 comes from the Yale uh budget lab you've probably seen this very frequently charts like this and it shows that in

the period when uh which Donald Trump thinks was the period of greatest success for America the late 19th century And it was a period of extraordinary success. Uh the US was

extraordinary success. Uh the US was spectacularly protectionist. Its average

spectacularly protectionist. Its average tariffs were about 30% effective tariff.

Um uh then uh there was a period of liberalization in the early 20th century and

a big a big rise in the 30s and then the long liberalization which started in the 30s and then very recently you got the

line at the end this sudden spike back upwards to where protection was about 100 years ago. It's quite a remarkable

reversal. Now the the big point I wanted

reversal. Now the the big point I wanted to make here before moving on to that is those tariff policies weren't some sort

of accident. They expressed a very

of accident. They expressed a very profound commitment to economic nationalism and industrial policy with the tariff as the principal instrument.

Very much what Donald Trump believes. He

really does think 19th century and The ideas that underpin that were of course the important associated with two particular intellectual figures Hamilton

in America and list here in Germany and they were the proponents of interventionism above all tariff policy intervention but not only using the

emerging banking system to develop the economy. They were believers in

economy. They were believers in aggressive industrialization and of course Marxism and socialism also the political debates over this long

period and in the end of it liberalism got completely eroded as a set of beliefs uh and that's what Thomas's novel is about and of course in today's

world China's success seen also similarly as pro the result of a mixture of protectionism and interventionism of

a brilliant kind is also clearly driving very similar views of the uh these guys are cheating, we should follow them.

Again, a sign and that's what happened to Britain. Britain became protectionist

to Britain. Britain became protectionist in response to the protectionism of as they saw it of Germany and the United States.

So that's history rhymes and in a way it's the most maybe the most important thing I saying in many very important ways. It seems to me what we're going

ways. It seems to me what we're going through now, different context, different time has very clear echoes of what happened at the end of the first

period of globalization through the 30-year collapse that followed. Now uh

and here if I think about it now I would say the most important question is can we bring China and the US into a single functioning system because it's the only

way we can replace the sort of we had with the US and Europe working with the US in the postwar period. Now now I'm going to talk about where we are now.

We'll go through relatively quickly because I far too slow. First point,

politics can never be separated from economics and vice versa. We are in a so far mild but decided democratic recession. The term Larry Diamond of

recession. The term Larry Diamond of Stanford has used. So we're seeing the reaction against democracy. Of course

seeing the reaction against liberalism.

You can see that in ch America's trade policy every day and the discussion in here and Europe associated with China.

Populism is on the rise especially right-wing populism again. of course the feature of the early 20th century economic nationalism are also and interventionism on the rise in all what

we're seeing is an anti-liberal counterrevolution across the board most dramatically I think in the US and the most important reversal is in the US

which is the guarantor of the post world war I order so this is where we are so I've just go back oh sorry apologize

so just go through this very quickly going crazy. Okay, this is um I just

going crazy. Okay, this is um I just want you to this is on the rise of democracy. I've given you a very brief

democracy. I've given you a very brief synopsis of this. This comes from the VDM database. Again, it goes back to

VDM database. Again, it goes back to 1794. Actually, the big thing about this

1794. Actually, the big thing about this chart is it decomposes the elements of a liberal world, a particularly liberal

democracy. to its components. Private

democracy. to its components. Private

civil liberties, judicial checks on government, legislative checks on government, rule of law, democratic elections, and liberal democracy overall, which is the blue line. And it

basically shows the long uh rise of democracy, the collapse in the 30s and 40s that's already obvious and then the incredible surge in democratization in

the late 19 20th century reaching a peak about 20 years ago and now it's falling.

It's not dramatically falling but in the if you look at the various components it's falling across the world and you can all see if you think about it what we're measuring. people are measuring

we're measuring. people are measuring when they see this. But there's

something else that has been happening which may be more significant pointed which is the rise of populism. And for

this purpose, the purpose of this analysis, populism is defined as a politics built around anti- elitism. A

politics is built around the idea that we have these elites. They're corrupt,

indifferent, hostile, incompetent. And

if you give me the populist leader, the power I need to take these people on, I will transform the society in the way you want. And that's what the left and

you want. And that's what the left and right populists tend to have in common.

This comes from a very important piece of research done by three German economists Shoulick Funker Shulerik and Trevish on populism in the last 100

years. And all I wanted to show you show

years. And all I wanted to show you show you is if you look at the the purple which is rightwing populism and red which is the leftwing populism the

proportion of governments that are have been elected in the last same will be true if we went up beyond 2020 uh has reached extraordinarily high levels

indeed unprecedented in the proportion that are both right and leftwing populism but rightwing populist has been far and away the most effective. We have

moved into a populist era and I should note because it's important in this context that from the point of these analysts Hitler was also a populist as thus defined of course he was vastly

more than that. Now

um one of the characteristics of a populist government of the type I've described they've defined is when the person in

question gets into power he starts ruling by decree and he rules by decree by using emergency provisions and this is one of the most remarkable this chart

shows the most recent presidents of the 21st century and red Trump one and the line that shoots up on the uh uh at the

end of the red line is the first seven or eight months of the Trump presidency.

And this shows the number of emergencies that have been declared in order to allow the president to rule by decree emergency of the southern border over

drugs over energy policy over drugs from Canada, drugs from China and drugs from Mexico. The International Criminal Court

Mexico. The International Criminal Court was an emergency. Trade imbalances are an emergency. That's what the Supreme

an emergency. That's what the Supreme Court has just ruled out. And Brazil's

prosecution of his ex-president Bolsinaro for trying to overthrow the election is also a national emergency.

In other words, it can be fair to say that the president administration of the United States has used and abused the emergency provisions in US law to an

astonishing degree. And that's exactly

astonishing degree. And that's exactly what you would expect a rightwing populist to do. Now the uh how significant is the backfing in this the

most important case in the world right now. Um well this chart I've taken from

now. Um well this chart I've taken from my colleague John Bernard who I think absolutely magnificent and this is built

on a very complicated score card.

is put together backsliding from liberal democratic norms of the type that I showed you in the earlier chart from VM for five

interesting cases. Hungary, Venezuela,

interesting cases. Hungary, Venezuela, Russia, Turkey and the US. They all are dramatic cases of blacksiding backsliding. Of course, they start from

backsliding. Of course, they start from zero. So they start at the same level.

zero. So they start at the same level.

But the key point he made in his wonderful article on this is that in the first basic year of the second term US the

backsliding has been faster though it's not as far as in any of those other cases it is a remarkable case of

democratic backsliding and that is part of where we are also want to show one other aspect which gets back to the trade side of this my

measure of globalization so this is a measure used trade alert of what they call harmful trade policy

interventions, mostly quantitive quantitative controls of various kinds and other regulations trying to halt imports. And the main point I wanted to

imports. And the main point I wanted to make here is actually the level has been very high since the financial crisis, but it has doubled since 2000. globally

we're moving very clearly it's not just in America away from the liberal paradigm uh that we believe 40 years ago

30 years ago in the ' 90s when the WTO was created we had moved into so in terms of democracy and in terms of economic liberalism globally I can't go

into other aspects they all fit into we are in a period of black hiding which is quite striking quite light though we know where as far

what happened in the inter war period now how did we get here what had drove us in this direction well I'm going to

argue very briefly there are the four elements and that's part of the four elements that uh come together came

together in late 19th first half of the 20th century are coming together First liberal globalization creates opportunities for rapid catch up and

then opportunity the countries that caught up start to go ahead and that's what happened dramatically in the cases I showed you in the late 19th and early

20th century and it's what's happening again now but this time it's China and India it's nonwestern so the catch up process is a decline of the west that's

just what it is secondly running together liberal societies, democracy and liberal economies is quite difficult. In my discussion in my book,

difficult. In my discussion in my book, I call this a difficult marriage or a marriage of complimentary opposites.

Basically, I can't go through this argument. Democracy and capitalism need

argument. Democracy and capitalism need each other, but they're in tension with each other as well. And that has to be understood if we think about how we run

our societies. Technological and social

our societies. Technological and social change is causing huge evils for our society and I'm going to cover some of them just a few slowing growth

de-industrialization low fertility aging and pressures for mass migration I can only touch on those personalized media transforming the

consumption of information and AI is now set to transfer transform our economy further all these sorts of changes but in different guys it was a different

history also were working in the earlier 20th century So our political, economic and social institutions are struggling to handle

the comprehensive economic, social, political, cultural changes we are living through. That was very much the

living through. That was very much the theme.

Now let's just talk briefly about this difficult marriage of democracy with butoracy with capitalism that generates huge inequalities of wealth because it's

part of it. The history of complex societies is of course one of extreme inequality of political and economic power. By complex societies I mean the

power. By complex societies I mean the societies that emerged after the agrarian revolution. And when you got uh

agrarian revolution. And when you got uh extreme inequality of political and economic power what tended to happen is the power made people wealthy and the

wealth gave people power and wealth were the same thing. The richest person in the Roman Empire was the Roman Empire.

And that was generally true in such societies.

When we started on democracy, we were trying to do something unbelievably revolutionary.

Well, pretty revolutionary. They tried

it in Athens in a different way. Namely

to have power and the distribution of power separate to a large degree from the distribution of wealth. In a de democracy there is the assumption of

fundamental citizen equality but obviously there's not economic inequality in a capitalist society. Um

so that's why I say democratic capitalism is a difficult marriage of complimentary opposites. Now again I

complimentary opposites. Now again I don't have time to go through gigantic wealth returned. We have plutoaucracy

wealth returned. We have plutoaucracy and given the need to plate the masses, the emergence of plutoaucracy has quite

naturally generated another complimementary power structure which is charismatic autocracy within our democracies. That by the way is what

democracies. That by the way is what happened in the Roman Republic of the first century BC. I wrote about that in a column uh that appeared in March 2016

not by accident. I was a classicist long before I became a Okay. Now let me just go through very quickly really quickly some elements of this. The first change

I wanted to talk about is as a trigger for the dissatisfaction with democracy slowing growth. So this basically shows

slowing growth. So this basically shows the first rectangles show uh GDP per head growth between 1980 and 2007.

That's the dark blue. The Next column shows the GDP growth between 2007 and 24

and the red column all negative shows a change and basically growth rates in all the major western countries including

Japan in this have collapsed the US lease but they have uh collapsed. So

we're in a much more slowly growing economic system than existed before. The

second thing that has happened related to many forces but including the rise of China is a dramatic collapse in the proportion of the labor force working in

industry. And I think that has profound

industry. And I think that has profound social and political effects because it hollows out to a very significant degree the political power, the organized political power of the working classes

which are a very important element in the mid 20th century social democratic systems that emerge across the west and you can see how dramatic those declines

are from the pink rectangle. And the

third thing that I wanted sorry is we have tremendous difficulty though it's varied across country in coping with another set of changes which we really

didn't prepare for and think about which is the revolution of immigration which has created an enormous rise in the foreign share the foreignb born share of populations across the western world

countries varied in how well they did with this some did very well uh with relatively high levels of immigration some much worse but it's a profound

change which would be really very bad in many cases in handling. Those are just three of many elements which I discuss in my book of the transformation of our

policies in the context of what has become particularly here this continent slow now. So what is at stake as a result of

now. So what is at stake as a result of these pro these transformations global economic and global power and in our

societies? Well, we've ended up

societies? Well, we've ended up to sound this in an era of revolutionary or I would say counterrevolutionary upheaval. And this revolution undermines

upheaval. And this revolution undermines prospects of four fundamental aspects of the world we used to think we lived in.

It's generated a big rise in anti-democratic sentiment, anti particularly deep distrust for the

elites that run the institutions of democratic societies such as the people here. You are the elites for this

here. You are the elites for this purpose. Uh

purpose. Uh they threaten prosperity. I'll come to this a moment. They threaten peace because extremely adversary relations of

adverse interventionist protection states with one another and they threaten cooperation. So let me just talk about

cooperation. So let me just talk about this very briefly and this is just to give a I won't go into this in any great detail. This just a little bit more on

detail. This just a little bit more on the democracy. This is much more

the democracy. This is much more detailed than the earlier chart site showed and it divides democracy again.

feed them into liberal democracies. The

sort of countries that have really functioning institutions, funing legal systems, individual rights, functioning electoral system, really liberal

democracies, electoral democracies where the elections count, but the rights of individual citizens, the rule of law and so forth are in question. Electoral

autocracies are systems in which people are elected but basically they are sort of elected but the elections are rigged and the the government is an autocracy and close autocracies are a system like

China the basic point is we have an awful lot of democracy quote unquote but some of them aren't very democratic really that makes them very very fragile

the liberal democracies truly liberal democracies according to this measure The whole panify of individual rights and wizards are really not only quite a

small proportion of total regimes, they're declining quite rapidly. You see

that in the bottom right corner. So this

is a picture which says when you look at all these democracies, they're not that democratic and when they're under real pressure, they collapse. And we've seen

that, if I may say so, very clearly on the other side of the Atlantic as shown you now what is at stake I said prosperity and again I'm returning to

the paper that I started with the paper by these three German economists I think all of whom at the ke institute and they sort of ask themselves well when these

populist autocrats get into power what do they do to the economy and what you have to remember what they tend to be against that's how they got there

against the institutions that are the core of a liberal system. They're

against all the independent technocratic institutions of governance. They think

they should control them directly.

They're against fiscal and monetary stability. Who cares about that? Just

stability. Who cares about that? Just

spend money and buy the support of the people. They're against the rule of the

people. They're against the rule of the law because it rule of law because it constrains them. They don't want to be

constrains them. They don't want to be constrained. And they generate extreme

constrained. And they generate extreme uncertainty and that extreme uncertainty generates very significant economic costs. And it seems to be pretty clear

costs. And it seems to be pretty clear Donald Trump has been doing all these things. Um, more extreme populist

things. Um, more extreme populist regimes at this are of course fascistic.

They go far further and they tend to science most forms of independent inquiry and independent media. And well,

what is the cost of all this? Well, this

chart shows what happens. And they say the year zero is when this the regime in question transforms from a normal democracy to being a populist democracy.

They look at leftwing populists and rightwing populists. They use a

rightwing populists. They use a synthetic alternative classic economic methodology with which we're familiar and they show very clearly that over long periods 15 years but it's very

difficult to get rid of these regimes.

These populist governments fail. They

generate very significant cumulative declines in economic performance and that doesn't make them makes them unpopular but it makes the country

unsuccessful and very very angry. It's

very difficult to get back from there to stability.

That's prosperity.

What is at stake? Prosperity for the world. It is worth stressing getting

world. It is worth stressing getting very close to the end of this that the period of the great liberalization.

I'm going here from 1950 to 2020 which started with the liberalization and opening up of the western world and other allies of the United States the

beginning of rapid modernization in countries like Japan, Korea and so forth. And then the post 22

forth. And then the post 22 1990 period in 2000. This has been a

period of staggering economic success.

Well, this is unambiguous. So this shows world average GDP per head after World War II and purchasing power par using the Madison project database PPP

numbers. Essentially the point I wanted

numbers. Essentially the point I wanted to make is this period which is now very clearly from what we're seeing coming from the US and possibly elsewhere to

coming to an end saw a fivefold increase in average world GDP despite pretty close to a doubling of the world's population. There's simply nothing like

population. There's simply nothing like this in the history of the world. It was

vastly more successful than the might first half of the 20th century let alone anything before that. So we I think should be very proud of what the west

produced globally and much of these increase was of course in the developing world.

Um and then finally of course peace the move back to a world of interventionist great powers is also likely to be a move to a world of war. Indeed we're already

seeing this raolitic great powers. We've seen it in Ukraine

great powers. We've seen it in Ukraine and we're seeing my god we're seeing it now in the Middle East. What what we're seeing now is obviously a continuation of the gas of war. This is now a

multi-year war and getting worse and we all know what's going on in Ukraine. And

war is not only a physical process. It

can also be fought with tariffs, sanctions, and other costly means. These

are economic warfare is also war. It's

different better in some sense and that is also what is now happening and its objectives of these processes of war both physical

war and economic war also frequently be economic is more or less more narrowly those of national security.

So it we are moving as a result what I say a world of hostile great powers in which others are under great threat and

finally of course cooperation. One of

the main themes of the post world war II order this what was created after the second world war which I think brought these remarkable success was the idea of institutionalized international

cooperation. I really don't have to

cooperation. I really don't have to explain that here because the ECB is a extraordinary exemplar of that. You

wouldn't have thought this was possible in 1950. Um and this uh was shown in the

in 1950. Um and this uh was shown in the creation of the UN Redwoods institutions, the GAN, sorry, missing a T, the WTO, the World Health Organization, climate change

conferences, etc. And of course, the EU and everything associated with it, which was astonishing. And the idea was we do

was astonishing. And the idea was we do better by cooperating. The key idea was that we need to cooperate in order to provide global and regional public

goods. And that is of course radically

goods. And that is of course radically incompatible with a world of competing great powers accountable to nobody else and for nothing they do which is very

much what led to the catastrophe in the early 20th century. Yet I fear that is the world we're moving into and we see it every day. And so development,

climate, trade and health cooperation and many things are now at risk if these processes are not reversed. And this is the very last

sheet. So I'm about two minutes.

sheet. So I'm about two minutes.

Apologize. Mark the Canadian prime minister very recently there was called middle powers to respond to what he called the rupture which is essentially what I've

been talking about in a different way.

And I have argued in many co-ops since then and before the EU has a unique potential role as leader of the world's middle powers because it's

itself a cooperative structure of middle powers and everybody except the US and China is a middle powerful quote and I've temporarily forgotten what he said is Europe is divided and of

course include Britain into small countries and countries that don't yet realize they're small countries and I think we'll immediately remember we said

But I think it's very very pregnant. So

uh um so many middle powers do not wish to follow the US in its inward looking direction and they need to be defended from it. And this gives the EU I think a

from it. And this gives the EU I think a specific economic what it was created to be after the catastrophes of the early 20th century a

new potential role in the world. But if

he is to play that role, he must become stronger, more independent internally and externally. And he must do that

and externally. And he must do that without becoming a normal great power.

Is this possible? I have no idea. But it

seems to me the challenge for the next generation of Europeans. Thank you very much for listening to me.

A little water might be a good idea.

I'll do that.

>> Thank you very much.

you know totally different perspective for central bank here we models if I told you you know the kind of

excitement that comes up you can discuss for centuries you know I I have you know we have 37 minutes. We

are going to pick up some questions from the audience online as well.

But I would like to start taking advantage of my position as operator now. What do you think about events of

now. What do you think about events of the day? What do you think about what's

the day? What do you think about what's happening?

So, um, one of the most difficult things to do, and I'm not I'm sure I'm guilty of this often in trying

to do these very because I feel that my the virtue of my position is I can address these gigantic questions and not think very hard about

the natural rate of interest thinking about unobservable pieces of information drives me crazy

read the literature too but anyway is to work out what is genuinely new and what is really a continuation of the

And I've made two points, one of which is I think true, both which are true.

People would argue and I think there is a lot of truth in it that this liberal world order that

I've talked about by all orders rests ultimately on coercive power.

There has to be power there and the power of course I wrote about this in my book on globalization comes from states state the power

structure of our world is that of states which are in our world predominantly nation states but uh in a world of rival states

uh the most important states are the most powerful and the post wars system at great length as I said in my earliest

book of globalization did depend it's a matter of fact on US and the stabilization of Europe in the end after

first after the second world war after obviously that's power and that gave the United

States great responsibility incredible influence and the capacity make very large mistakes.

It's just a reality. That gets to the second question. Are these mistakes

second question. Are these mistakes because I think they are important mistakes discuss different from the ones the US made in the past because I've

been having this discussion with me the last couple of days. They

the US has a long history in the postwar era. has had extraordinary successes of

era. has had extraordinary successes of the Marshall Plan, NATO and all that stuff and the Liberal and the W all this

can go on forever but it also has conducted a pretty long series of failed wars and some of them catastrophic the Vietn

the Vietnam The uh the uh the first Iraq war was a success, welldefined coherent international agreement. But then you look at the

agreement. But then you look at the second Iraq war, you look at the Afghanistan war, 20 years and total defeat, the

constant interventions in uh Granada, if I remember correctly.

So at le what we're seeing now isn't new.

It isn't that new. Um is uh one could say that the previous periods

the US mistake was to go in with ludicrously over ambitious objectives uh which ended up with endless wars forever.

Now this time they g for us I can see no objective at all. I can't work out what the objective is except to get rid of decap leadership and somehow get rid of

the nuclear program.

Is that going to be worse than what they've done in the past when we look back on this 5 10 years from now? Quite

possibly. I can imagine scenarios when the outcome of this will be a truly enormous catastrophy.

Um but it might not be. What you can say is this. To me, this is an example of

is this. To me, this is an example of the constant tendency towards military intervention of the US which the Chinese

are not doing yet and their tendency to make a mess of it.

What is new here is even at the beginning I think it is extraordinarily coherent.

I'm just comprehensive to print the column about it is impossible to make sense of. So

sense of. So in other words, I'm genuinely profoundly bewildered about what's going on. Uh and

that's the sense I'm getting from reading the most intelligent American commentators. They don't understand

commentators. They don't understand what's going on and they don't understand what consequences will be because they don't know what the people

doing it are trying to do. uh and my view is the most important context of this which I is that it should make

every decision making about the world matter saying what is the US up to the world's most important country what the hell is it up to

very good per the US got dragged in very very very unwillingly to Europe and after they thought they'd sorted everything out with the rather mistaken well I won't go

to the Versail treaty they had to get dragged back I assume I hope or pray that Europe has not yet forgotten the lessons

of Very good. So now we are going to open

Very good. So now we are going to open the floor for questions.

I don't know whether you know there I have you know one question we can we can collect two or three I think that we have micro

please introduce yourself and thank you ask your question.

>> Thank you my name is D.

ECB and risk management and like many commentators you're talking about democracy running into default in financial terms we would do a restructuring.

So is there anything you can think of how we can restructure democracy because in the end people vote populist leaders

to fix the democratic system. Very good.

Another another one I see another Okay.

Very good.

>> You have this graph about the purchase in power and the fivefold increase since the 1950s and uh the question is this is the total increase but how does this

being distributed and to what extent uh the nonpropy distribution after a certain point in time creates a lot of this populism that we're talking about.

To what extent this populism is linked really to the economic realities that some of the people might face or might feel that they face in the economies because we we demonstrated this big

success but this big success the narrative is that it's not being equally distributed after a certain point in time and this creates a lot of economic realities in the west that are driving populism because of people feeling

economically insecure or they feel that they don't have a let's say a fair cut of the pie that keeps increasing and At some point they say

destroy everything.

>> Is the table that you chart you refer to the one the rise of GDP per head?

>> Yes, exactly. Because GDP perhead about is just about how you're serving this GDP in proportionally in the societies and to what extent this big

success as you describe it's certainly the living standards. much more in the 50s. But to what extent this at some

50s. But to what extent this at some point in time started flattening for the average person let's put it that way.

So these two little questions um the you're a fascinating question the uh um

what I think I mean my immediate reaction in thinking this may work for this when a company is its solver. You mentioned

that as example. We know what a resolution means because we have a system that defines it and to a first order what we do is convert a lot of

debt into equity and if that's not enough it's sold off for whatever it can get and if it's worth nothing very clear processes.

The problem is uh if the political system goes bankrupt in some meaningful sense sometimes it

might be quite meaningful they can no longer service their debt they default but often it's not by definition

there isn't anything to resolve it because there aren't resolution process well there are resolution processes for of a certain sort the states if they're

small states and they get chewed over by the IMF but for major states it doesn't work like that and what we this raises the

most profound question of all who's responsible for states when states fail and that's my view in a way what's being raised by what's

going on in the Middle East. Um, so you're asking I think a different Well, you were asking, but you're asking a question

when a political system based on certain ideas, in this case, democratic elections doesn't work anymore in the sense it is

no longer either legitimate to the public or able to handle the problems it confronts. They're obviously related.

confronts. They're obviously related.

what do you do? And uh I think the parallel with the resolution idea, I can understand it, but it's much more complicated obviously. I mean,

complicated obviously. I mean, immeasurably more complicated and uh and I've thought a lot about that in in

writing my book and I did put forward some ideas or support certain ideas about mechanisms that might be better than the democratic mechanisms we have.

And um So I came to discuss uh the idea of making far more greater use of citizens assemblies as a way of bringing people together and I thought a lot about

whether there's things we can all learn for what seems to be obviously the most successful democracy in the world maybe Switzerland about the use of referenda and I've also thought about whether the

problem is our states are just too big but it cost fragment forever because you need some big states but I think all these are perfectly

worthwhile ideas, but I'm reasonably clear in my own mind that we don't at the moment have a better idea.

I have a long discussion in my book on the the problems uh dictatorships have pretty obvious problems, succession problems, getting rid of uh getting rid

of incompetent leaders. I can give you so many examples. uh uh rectifying mistakes.

The leader will never accept that they've made a mistake. So we we have a competition worldwide between defective regimes. But the

regimes. But the my summation will be I would try the ideas I've mentioned see what we can do

with them. Uh um but uh you're

with them. Uh um but uh you're essentially you're asking the most profound question in political theory

which is what form of governance works best and what do you do when it starts to fail and who and how can you do it since by definition the state is

sovereign and I don't think I there is an answer that's the tragedy of human organization we we are utterly dependent on entities states

that we can't really control properly and can't make work properly. That seems

to me the tragedy. Uh and all this was covered pretty amazingly well with an implausible answer in the first great book written on this whole subject which

Plato's republic which I quote a great course he was a passionate anti-democrat.

Now the second question is I think a very profound one. What makes people unhappy? That's a question and I think

unhappy? That's a question and I think the answer to that and I discuss a lot of this is we don't really know because there are so many possibilities and

there are different people who are happy for different reasons. The

I think it is plausible that relative positions in the distribution matter a lot to people, not just absolute decisions. And so big

rises in inequality are themselves problematic and that's clear. um how far that goes

if most people relative positions are unchanged say 95% of people's relative positions don't change much

99.9% don't change much but the 0.1% share of the wealth of an income trip

does it really matter to the other 99.9% That's a lot of what's happened. If you

read Paul Rman's recent writings, very very interesting on this. He just brings out how much of the increased inequality very recently in the US, which is

obviously is just the staggering wealth at the very very top of the income distribution. This clearly has enormous

distribution. This clearly has enormous power implications. There's no doubt

power implications. There's no doubt about it. People are worth three or 400

about it. People are worth three or 400 billion dollars. They have unbelievable

billion dollars. They have unbelievable power.

But whether that matters to people, I don't know. So it's not just the

don't know. So it's not just the inequality, it's what inequality matters. I have argued in my book that

matters. I have argued in my book that the most which is based on a lot of sociological work. I didn't make this

sociological work. I didn't make this up. The most important thing is in when

up. The most important thing is in when people in the middle to the middle of the distribution I've got a quote from

Aristotle about this experience what they see as downward relative and absolute mobility then you have a very

very big problem and therefore the combination of relatively slow growth with uh rapid de-industrialization

within the The whole set of jobs that went with that is particularly politically relevant because it destroys

a very important part of the stabilizing group of society which is the middle class and I fear that AI is going to do the same.

This is to a different part of the middle class but a very very important part. So I tend to think it's not just

part. So I tend to think it's not just inequality not just relative. It's more what happens absolutely and where it happens

and to how many people. It's a

complicated answer and I think there's a lot but we don't fully know the um there are uh how but I do in I'm inclined to

think that there is one respect at least in which the rate of growth also matters and this is that once you have a rapidly growing society

not Can you big shifts in the relative distribution in which nonetheless everybody is getting better off in some federal sense but you also start

generating opportunities for politics to deal with those problems without causing huge fiscal and monetary problems. And

so one of the problems I argue recently is if you combine with very clear stress points in our societies

in which essential growth is zero. Then

governments and you have also of course the aging process which is generating constant fiscal pressure as you know pensions and health. You have

governments which are constantly under pressure to spend money that they can't raise politically acceptably way. And

then the result is essentially everybody runs colossal fiscal deficits which we can't do forever. they're all going to expect the central bank to bail them out. So that does seem to me a way in

out. So that does seem to me a way in which the combination the demands on the public sector with extremely low growth and therefore chronically deficient

revenue situation. It creates a

revenue situation. It creates a political crisis which is seen as a failure of the state. And one of the things populist politicians tend to do

is to say that's not a problem. these

experts who are telling you the budgets have to balance. That's all crap. And

the central banks saying that they can't lower interest rates. That's all crap.

That's what Donald Trump is saying.

That's exactly what he's saying. And

it's not terribly difficult. I do

discuss this writing to imagine politicians saying much the same in European countries and they'll they'll end up talking to you.

I mean, it's obvious they're going to end up talking to you. So, it does To me once you start think about the pressures

on the stage slow growth itself can be a very very big problem even if it isn't associated with radical problem shifts into income distribution but the most

important conclusion I've reached this which is not very much help thinking about this everything is connected with everything else in really complicated

ways. So I'm not saying that it's

ways. So I'm not saying that it's obvious there is simple magic trick we can do that will solve all the problems we now face that are causing problem

I'll add one other thing which isn't I haven't said in the presentation but it's very important I do think that the financial crisis itself was a

staggeringly strong blow for populism and for the very obvious reasons there are two things about the financial any financial crisis particularly this one very clear

from the literatur very clear because it's massively politically destabilizing event for two reasons. One, a big financial crisis

reasons. One, a big financial crisis tends to follow be followed by a large recession or a prolonged period of weakness and people recognize that's

happened.

They don't like it. Second, big

financial crisis are clearly associated with the failures of identifiable people, bankers, everybody else in the financial

sector and the people who oversee them, namely the politicians in the financial sector and the central banks. And you

can't think of more elite groups in society than those. So they think, sorry, that's what Trump They're all crocs.

It's a destruction of confidence in the elite of the system. The financial

sector is a and finally worst of all, they're all bailed out.

So my argument right, no single event has done more damage to the credibility of our system. There are

many other but none the scale and intensity of the financial crisis between 2007 and 2015 and it will

take a very very long time for the people to forget this. There are other things going on but this is one of the processes that I think have re

revolution radicalized our society.

So it is very important the guys like you doing your jobs do it well.

I will continue taking advantage of my position because I would like to prefer talking about the happiness people.

I think that is indispensible when you look at the demographics of Europe.

It is going to happen. But

simultaneously you look at the radical on the right and the left political groups they are racing.

How do you read that kind of situation?

that because well you know an aging society you know I come from Spain immigrants and it was not a problem at

all perhaps because it was South American people coming with similar culture language religion etc etc but

now that you know that continually Okay. So

Okay. So again I discuss this great thing in my book on the crisis democratic capitalism.

So it's such a huge issue that's why I touch on it so little. I have the following elements of

thinking about. First, we know

thinking about. First, we know that no means universally, but one of

the ways certain sorts of populist politics operates is

we can see this superbly obvious is the populist politician, entrepreneur

articulates his they've always been as far as I can see position by saying I represent you the ordinary

decent hardwork of this country.

You have two enemies.

Three.

The predatory elites, the competence, the crooks.

Two foreigners.

And three, particularly foreign people here who are causing all the crime and destroying civilization

and stealing all your money and all that.

So you get a political movement which attacks simultaneously the powerful elite there are difference

and the outsiders and God you can see this right through history and now and this is brilliant politics

because it satisfies people's demand can't get away from People get great pleasure in finding is pretty obvious.

If you read one of the great books of British historical analysts is Norman coat pursuit of the millennium he talks about a different form of the

millennials they tend to operate in the same way people with the devil are anyway so that combination

works and it works particularly well when people feel under stress.

Now it's clear then to the second thing I think it's it's very very important to make how do you deal with this? I

think there are two necessary conditions for dealing with it but I'm not saying they're sufficient. I don't know. We'll

they're sufficient. I don't know. We'll

see.

One is to make clear, you are choosing who are immigrating.

That is to say, you do control your borders.

And it seems to me very struck in the British debate. There's far more

British debate. There's far more complaint about the relatively small number of people coming in votes than there is about regular immigration. And

I think the idea here of people is we need to know who they are and we need to have chosen in some sense. So I do think it is a necessary condition for a

successful democracy that it appears to have control over its borders in Europe. It's collective but

it's the same that that seems to me very very important. But it also is necessary

very important. But it also is necessary to put forward for the reasons you find that we do need we're going to need

foreign workers and we will know who they are. We give them permission to

they are. We give them permission to work here for a certain time or period.

It's clear what the rules are. They can

have different rules. They will be subject to all the normal laws. They pay

taxes and all the rest of it. And we

will say certainly if they are to become citizens that they have to learn our langage, our culture become part of it.

There are rules for this. It's not but I think there is a reasonable chance pretty good chance that if you explain

this properly um people will accept it.

Of course, alas unfortunately true that differences in ethnicity, race, whatever that means,

religion, so forth make all this more difficult and um but I think that can be managed. But those are I think uh the uh

managed. But those are I think uh the uh you have to get away from the politics which we've seen obviously and you have to have

proactive statement. This is your

proactive statement. This is your policy. This is how your policy works.

policy. This is how your policy works.

This is why we need them. And this is why how we're going to you can't just let it happen. Uh uh in

my view um the because it is inescapable and there isn't um any any serious alternative.

But I do think looking back on it, we made some pretty mistakes in how we handle this. But really bad politicians,

handle this. But really bad politicians, bad people will use the presence of foreigners as a way to create divisions

within society and to create uh this intense conflict over the outsiders

within. And that can lead to truly

within. And that can lead to truly catastrophic results and tragic results.

And I think we're seeing this now. And

it frightens me a great deal. If you

talk to America, my American friends, the operation of ICE, is probably the single thing the most.

I suppose to you know diversify a little bit because our online audience is what could have been built from the start so

many decades ago to prevent this rapture.

And the second one is more looking at the ECB and is what can the ECB do to work against this crisis of the world

order other than of course deliver on its mandate.

>> Well, I would say there are two things which I suppose do fall broadly speaking within the ECB. Correct me. How about

Let's not have another big surge of inflation. Thank you very much. It would

inflation. Thank you very much. It would

be very good not to do that again.

Deliver on your mandate. I am very worried and I discussed this over lunch here about financial fragility

and I'm very worried we could I don't think this be the fault of the ECB but I am worried about further financial crisis and some of the policies are

being pursued. So um

being pursued. So um I hope the people who think about this in the world, certainly in Europe, are on top of what's going on in our

financial sector and and I think it's far less dangerous than other places in the world. But you have to think about

the world. But you have to think about where that is going. What was the first question? Sorry.

question? Sorry.

Ah, yes. Uh that's a really Okay. Uh I

don't have much time left yet. So

the four minutes um in retrospect uh I think

um we spent and I include myself far too little time in the western world

thinking about what China would mean and how we we took a very less a fair

approach to what was going on largely because I think we gigantically underestimated the significance of its rise and the speed and the and when I

look back on it. Uh there was one area where I clearly understood from the beginning that the tendency of China to become a massive surplus country in the

world trading system will be hugely macroeconomically and microeconomically destabilizing that I was clear on and I wrote about this start in the early

2000s and I think it played a big role in the financial crisis by the way uh Chinese but on the industrial policle

China's successful industrial policies.

Uh we didn't really devote any thought and now we are very late in the game. So I

think that was a that was a mistake and we should have been far more proactive in thinking about that. And then the

second thing is really related to that uh lots of other things.

a few countries that I think have done this quite well but I don't think we have been proactive enough in thinking in Europe particularly Denmark for example but they're thinking about the

following way we are going through and have been going through and will continue some really giant uh technological upheavalss and

competitiveness upheavalss associated with China this creates uh um the need for people to change

their uh their jobs, their activities, their locations quite radically and we have tended I think to be very less affair

not about income support there sort of income in Europe and America they'd be much worse but the question about how can you proactively help give people the

resources to learn the skills that they will need as they move from one to another. Uh I think we found

to another. Uh I think we found certainly Britain, it's very strikingly so whole regions that have collapsed.

The collapse of industries hollowed out entire regions and once that happened is really hard for people to build that back up. I think that's also what's

back up. I think that's also what's happened in the US and it's part of the what you're seeing in terms of the despair. I write this book. I think we

despair. I write this book. I think we should have been much more proactive. We

uh these ideas are more than adjustment assistance. My wife is the expert on

assistance. My wife is the expert on skills training and so forth. I think we could have been much better. A few

countries particularly the Nordics seem to me to be particularly good at this.

Uh but people were abandoned and they felt they they were abandoned and they feel they were abandoned and I think that must be true in some parts of Europe. no parts of Italy where this is

Europe. no parts of Italy where this is the case and that was a tremendous political failure because you can't support a liberal economic system

without dealing I think head on. It's not

something I last thought 30 years ago but I certainly do now without dealing with the casualties. You can't expect people in a liberal democratic society

to say okay I'm on the I'm on the trash heap and I'm going to accept it. That

doesn't work. That was a big mistake.

>> Thank you very much Martin. I think that we are reaching the end of our time. I

would like you know thank you and you know my gratitude is this fault first because you have uh have referred

you know a different perspective to the one that we normally you know deal with you know in a central bank and I think that that's very important you know it's

a bigger world yes for sure going beyond the natural interest rate and you know the models on the output so that's my first my first

gratitude element of gratitude to you.

The second one is because of the defense of you know the liberal values. I think

that that's key this for those who believe and I think that around you know this audience we have a lot of them in

you know the values of the rule of law you know respect for the minorities of that

and so I want to express my gratitude to you and that's why you know I I ask for for